Under Funded Pension VS. Over Funded Welfare

   

Recently, the National Association of State Retirement Administrators recognized New Jersey as having the most underfunded pension system of all 50 states.  They said that the NJ pension fund could be out of money by 2027 http://www.nj.com/politics/index.ssf/2015/03/nj_pension_system_most_underfunded_of_all_50_state.html#incart_river.

This isn't too much of a surprise, since New Jersey skipped pension payments completely from 2001 until 2004, and have generally put in less than the required payments since the mid 1990's. This resulted in billions less being put into the pension accounts, while at the same time, benefits increased.  Keep in mind that during this time, all of the union workers kept making payments without skipping a beat, and were forced to increase their pension payments to keep the pension funded.  In addition to an increase in payments, the retirement age was increased, and the cost of living adjustment was eliminated.  It hasn't worked out so well, and currently the state faces an $83 billion unfunded pension liability.  This is by no fault of the union workers, but the blame lies squarely in the laps of our current Governor and his predecessors.

     Governor Christie has touted the pension reform from day one, even after promising the unions not to touch their pensions.  It has been the mainstay of his soap box, and continues to this day.  It's a shame that the hard working union members, who have made pension payments from day one of their employment, have to be the scapegoats for the failures of the Governor.

     What I find upsetting, is how the Governor has been basically mum about reducing the benefits (handouts) that are given to a slew of residents, both legal and illegal, that have been on the receiving end of our tax dollars.  These are the same tax dollars that the Governor says is lacking to the point of an almost broke TTF (transportation trust fund).  Just as an example, according the a study by the Center of Immigration Studies, in 2009 (based on data collected in 2010), 57 percent of households headed by an immigrant (legal and illegal) with children (under 18) used at least one welfare program.  You saw that correctly.  Fifty-seven percent.  Over half are receiving welfare benefits.  Nationwide, Newark, NJ ranked No. 1 on a list ranking the cities across the country with the highest percentage of households on welfare.  That' right: NUMBER ONE in the country.   Where is the outrage and public condemnation?  (Insert sound of crickets here).  Welcome to the welfare state.

     While there have been some minimal reductions in welfare, the funding doesn't seem to be in the spotlight like it was years ago when "work-fare" instead of "welfare" was a hot topic.  Currently, the attention seems to be aimed directly at those that helped fund the welfare bottomless pits: the taxpayers.  Don't get me wrong; there are very legitimate uses for welfare.  It should be a temporary crutch to get a person or family back on their feet.  One of the problems is that many have come to rely on this crutch as an income with no end.  Fraud is rampant in welfare.  Additionally, what incentive does someone have to work when welfare pays more?

     The Governor is all about "reform", specifically PENSION REFORM.  It's about time that the Governor change directions and take a good hard look at WELFARE REFORM instead.  Welfare is supposed to be temporary, while a pension is for life.  One of the huge differences is the welfare recipients are receiving money put there by others, while the pensioner is receiving money put there by him/her, employer contributions, and the pension fund investments.  The number of people taking some type of welfare or handout from the state vastly outnumbers those receiving pensions.  This may be why the Governor doesn't want to piss of those voters...I mean constituents.

     While there are some attempts to reform welfare into a form of "work-fare", surprisingly enough, the ACLU is objecting to it for a variety of reasons, including calling it a form of discrimination by making someone work for their benefits.   How dare the government make someone work for their benefits! I don't recall the ACLU supporting me in my twenty-five years of working in order to get my benefits (which I paid dearly for).

     According to US Government Spending.com, in 2015 New Jersey will spend $9.7 billion in the pension systems (all of them), while at the same time, spent $9.1 billion in welfare.  Where will this money come from?  The pension money comes from the union members, employer contributions, and investments.  The welfare money comes from taxes.  Your taxes.  My taxes.  Reducing the rampant welfare fraud, and requiring welfare recipients to work for their handouts should be just the start.

     This is where the Governor should be focusing, not on the already beaten down union members who have worked their entire lives and put more money into the system than anyone else.  We've given enough.

     If history is any indication of how he will do as a Presidential candidate, he will embarrass New Jersey.

     Just my opinion.

Note: Ok, so the headline may be a bit deceiving.  Do I honestly think welfare is "over funded"?  No, not really, but I do want it reduced substantially through various means.  Welfare (workfare) has its place, but not to the extent it is being used now for "entitlements" or handouts.

My pension does not belong to politicians

   
 My pension should not be a political pawn.  Say it again:  My pension should not be a political pawn.  Okay, now that we've gotten that out of the way, lets get back to reality.  Right now, Governor Chris Christie is taking the national political stage, and he needs something meaty to bring to the table (insert food joke here). Unfortunately for countless government workers who are not making the big bucks unlike the political power-brokers, our pension is the meat; and the table is the national stage.  Governor Christie has been targeting the broken system (that he helped break) as the reason for all of the State's problems.  Fix the pension "problem", and all is well, right?  Uh, no.  Is the pension issue really a problem?  Maybe.  Maybe not.  As I've written previously, I don't see the pension as a crisis.  I see it as a scandal; a scandal that needs to be investigated by non-partisans as if this was a potential criminal act committed by our political leaders.

     When I started my public worker career years ago, my salary was relatively low compared with the private sector.  I accepted this in part due to the benefit package that came with the job.  One of the parts of the benefits package included a pension.  Not a free handout, but one that required me to pay a nominal part of my pay into the pension system that would afford me the "luxury" of a guaranteed income after I do my time. This is similar to Social Security, which by the way I never paid into and will never get.  For all you in the private sector, please read that last sentence.  I will never get a penny from Social Security because my employer did not take this from my check. Instead, they took a higher percentage of my salary (as compared to the 6.2% I would have paid as required according to Social Security Administration).  The last few years I paid 10% of my salary into my pension.  Before that I paid 8.5%.  Did you see that little two letter word two sentences back?  Who's pension did I say it was?  Mine.  I did not pay  into the Governments pension, I paid it into MY pension.  It was mine when I began my career, but lately it seems that Governor Christie wants the public to believe it's his to do with as he pleases.  Don't get me started (again) about how every governor since Christie Todd Whitman stole BILLIONS from MY pension, or how Governor Christie failed to make the required pension payments even though every foot soldier of a cop/firefighter/teacher made every payment without even a chance of skipping one.

   According to the Department of Treasure, the average firefighter & police pension benefit from this state is just under $58,000, while teachers get about $40,000.  Right now, there is no C.O.L.A. (cost of living increase), so the number you get is the number you get.  Forever.  Take into account that the average police officer dies within five years after retirement and reportedly has a life expectancy of twelve years less than that of civilians. (according to the national criminal justice reference service https://www.ncjrs.gov/pdffiles1/pr/109485.pdf)

     Why is New Jersey's pension issue such a hot topic?  Because politicians made it so.  Not only did they create the problem, but once they realized just how bad it got from their mismanagement, they shouted from the highest mountain telling everyone else how bad it was and now it needs to be fixed.  What makes New Jersey different than other states?  Why aren't other states' pensions in such disarray too?  Mainly because their Governors didn't raid it like their personal cookie jars like our Governors did for decades.

     The words of Mark Webber from NJSpotlight.com,  ring true here.  He stated "These states have proved that a sustainable pension system is not a fantasy; all it requires is honesty, discipline, and an ethical code that asserts that debts must be paid. If I run up my credit cards, I don’t get to walk away from my debts just because I don’t want to make sacrifices. States are no different: New Jersey can’t abandon its obligations just because tax hikes would get in the way of Chris Christie’s presidential ambitions".

     That is what this is all about.  The political ambitions of one Chris Christie.  The man who currently makes $175,000 a year (according to data universe), was also the U.S. Attorney for the district of New Jersey (can you say "federal pension"?).  This is also the same person who was elected as a Republican to the Board of Chosen Freeholders for Morris County in 1994 (can you say another pension?).  And lets not forget that in 1993, he was made a partner for the law firm of Dughi, Hewit & Palatucci of Cranford, NJ (can you say "cha-ching!!!").  So this is not a man that cares about the little guys.  He's a shark and we are bait fish.  He'll make sure we don't grow any bigger by eating us en mass.  He's doing this little by little every time he "reforms" the pension system.  But he's not reforming it, he's destroying it.

     If the government kept its nose out of my pension, maybe I'd support someone like Christie.  Remember the letter?  You know which one I'm talking about.  I wrote about it in my first blog post on this site.  Let me remind you about "the letter" in which he described the "sacred trust" and that he would never change our pension.  He did this for our votes, which he got, and almost immediately afterwards, reversed course telling the public that the pension needs to be fixed.

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     Governor Christie, do not politicize my pension.  It is the contractual compensation I have earned for work done.  I paid for it without skipping a beat, while you have paid when it was convenient for you.  It is not yours to play politics with.  It is mine to live my life with.

Fix it or forget it - the NJ pension issues

I'm not a fan of the Trentonian newspaper.  I think its better served as a blotter at the bottom of my bird cage than anything else.  Except for an occasional page 6 girl, there's not much worth reading in what many have called the "Trashtonian".  There are two columnists that are regular's for the Trentonian, L.A. Parker and Jeff Edelstein.  I've read their columns in the past, and I'm not really fans of either one of them.

Sometimes they spice things up and make things interesting.  On June 11, 2014, they did just that, but in an unusual way.  They each published opposing thoughts on the New Jersey pension problems on the same page.  The headline read "Split Decision: Should New Jersey's pension program be blown up?" Parker was in favor of keeping it, blaming the problems on the government, while Edelstein didn't blame anyone but whined about why we should scrap it and start from scratch, calling it "unsustainable".

Parker and Edelstein traded spars, but in my opinion, the winner by a knockout was L.A. Parker.  Please don't take this as a show of support for him; I've read lots of garbage in his columns in the past.  Today he shined just a little.  Case in point: Parker points out that Edelstein is a staunch Christie supporter.  I agree. Read his columns and you will too.  Parker also adds the fact that the most recent problems are the result of the Governor "miscalculated or misrepresented" revenue projections.  I again agree.  Christie tried blaming Dr. Rosen, the Chief Budget Officer for the states office of legislative service for the miscalculation.  What many don't know is that this same Dr. Rosen warned Governor Christie about this impending crisis, but the Governor brushed him off.  Later, when Governor Christie was called out on this miscalculation, he said Dr. Rosen "just got it wrong".  Actually Governor, he was right, and you ignored him.  Had you listened to the man who had a reputation for being right, you may not be in this predicament right now.

Governor Christie blamed the pension problems on past Governors, ignoring the fact that he participated in the same activities as his predecessors.  He reached deep down into the pension cookie jar, removed several large handfuls, handed them out to his friends at the playground, and didn't put the cookies back as promised.  To help "fix" the problem he help create, Christie raised the retirement age to 65, burdened public workers with higher costs and payments, and eliminated the cost of living increases.  L.A. Parker points out that "our leaders need to put all potential problem solving issues on the table including hiring practices, payments made for years of unused vacation and sick time, and practices that allow a double-dipping of pensions."  Again, I agree.  Multiple fixes should be on the table for this one, not just one.

Edelstein, on the other hand, gave little in the way of facts. In fact, he even got some things wrong.  For example, he states "None of this getting the average of your three highest salaries for life.  What a crock!  Really.  Get a 401(k) like the rest of us."  Lets talk facts here.  Nobody in in the Police & Fire pension, or the teachers pensions gets the average of your three highest years averaged out for the rest of their lives.  The reality is that it is a percentage of that number based upon the number of years in the pension system.  Spend 25 years in the Police & Fire pension system and you are eligible for 65% of that, not 100% as he makes it seem.  Spend 20 years in Police & Fire, and you get 50%.  Edelstein also remarks about how unsustainable the pension is now based upon the average life expectancy compared to when it was first put into place in the 50's.  What he completely failed to mention is the reason it it is "unsustainable" is because of the BILLIONS of dollars removed by the Governors, as well as the BILLIONS in missed payments due to "payment holidays" the municipalities were given by the Governor.  Yes, the pension is funded at about 65% (or less), but fifteen years ago it was over 100% funded!  This decrease was not due to payments to retirees or from current workers not making their bi-weekly pension payments.  This decrease is because of both Republican and Democratic Governors grabbing money from the public pension trough, using it for their own pet projects, and never repaying it.   PERIOD!  Jeff, you missed this.

L.A.Parker - 1   Jeff Edelstein - 0

P.S.  I wrote this blog very slow, so just in case you are reading it Governor Christie, you'll be able to keep up.

Pension cuts head to court

On June 25th, oral arguments will be heard by Mercer County Superior Court Judge Mary Jacobson for a lawsuit brought by the NJSP union.  Judge Jacobson said she would decide whether Christie's plan violates the 2010 pension law that Governor Christie himself passed.  This will be a major challenge to Governor Christies plan to skip a huge pension payment for both this and next fiscal years.  Governor Christie said he needs to use the money to solve a budget crisis.

The Governor is planning on taking $900 million through an executive order he signed last month, and an additional $1.5 billion for the next financial year (which begins in 3 weeks).  Christie said the state constitution requires a balanced budget every year, and this money is needed to prevent huge cuts to hospitals or schools, or major tax hikes.  However, his failure to make the pension payments violates a law he created during his first term.  It also violates a section of the NJ state constitution that states, in part, "the Legislature shall not pass any bill...impairing the obligations of contracts".

The Governor has stated that failure to make these payments is fiscally irresponsible and taking the pension money was a "regrettable move", but the state can't afford to keep paying public workers the benefits they currently get. Lets not forget that this is the same Governor that just gave many of his own staff raises as high at 23%, while at the same time he requires others to stay under the 2% cap.  How can he call one thing fiscally irresponsible, but give huge raises at the same time? 

New Jerseys Moody's credit rating has been downgraded several times since Christie has been in office.  Fee's in New Jersey have skyrocketed.  The cost to register as a corporation fifteen years ago was $50 per year.  Today it is $500 per year; a 10-fold increase.  Motor vehicle fees have quadrupled in the past fifteen years.  These are not considered "taxes", so there is not much in the way of public outcry.  Is there really a difference between a state fee and a tax?  No.  When there is a shortage of money, you would think the Governor would created a solid tax base from businesses that are seeking to come to New Jersey, but he does the exact opposite.  Since 2010, the state has doled out over 2 billion dollars in incentives to corporations and developers.  Compare that number with the $1.5 billion given out in incentives during the prior 10 years. That money could have been used to our benefit, not to the benefit of corporations and developers.

Never in the history of our state has our leadership been so poor.  Lies, deceptions, double-speak, willfully not following the law, and so on and so on...

Judge Mary Jacobson, please make the right decision, and put our pension fund money where it was meant to be.







.

More bad news for the pension system - and more double speak by our Governor

New Jersey can't seem to keep out of the news lately.  I guess its because we have a Governor that has his sights set on a national stage.  Governor Christie is weeks away from announcing his proposal to overhaul our states pension and retiree health benefits plan.  The rumor mill is swirling that it might be some type of "hybrid" model that would reduce the defined benefit payout, as well as something like a 401k plan.  He keeps saying that the current system can't be sustained.  The reason he believes this is because he allowed towns to skip their required pension matching payments, and he also failed to make the states full pension contribution.  Although three years ago, Governor Christie himself passed a law requiring the pension payment, he decided to ignore it in order to use the money to balance the states budget.  This is just another example of his ability to talk from both sides of his mouth.  He touted this law when it was being proposed in order to (again) gain support of the police and fire unions.  "Hey, look at me, I'm fixing your problem.  I'm your friend".  Once again he lied.  He did not fix the problem.  His own law that he pushed through was ignored. 

New Jersey has already eliminated the "COLA" (Cost of Living Increases); a savings of $74 billion over 30 years according to our Governor.  He also touted another savings of $48 billion by requiring employees to pay more toward their pensions, reducing pensions for those taking early retirement, and raising the retirement age from 62 to 65.  A total savings of $112 Billion!  What's next?  Reducing all officers pay to minimum wage?  Eliminating health benefits entirely?  Health benefits is one main reason many officers joined the ranks of police and fire, or became public school teachers.

Here is a little history lesson for the uninformed. As recently as the 1980's, police officer and firefighters were relatively paid poorly compared to the private industry.  They were considered blue collar and non-professional.  In order to induce people to join the ranks of police and fire with low pay, the carrot that was dangled in front of the was good benefits.  Seemed like a fair trade off at the time.  The "problem" is that over the years, contracts regularly gave pay increases of 3-5% per year, and sometimes more.  Over time, those poor paying jobs became good paying jobs, and eventually they became very good paying jobs.  The benefits were still good, so now you have officers making good money and getting good benefits.  Along with the higher pay and benefits came the increased professionalism.  Being a police officer changed from being a "job" to being a "career".  With professionalism came better educated officers.  No longer were high school diploma's the minimum requirement.  College degrees became the norm; if not for hiring at least for promotions.  College degrees included Masters degrees and even higher over time.  It was not uncommon for a majority of officers on a department to hold college degree of one type or another.  Criminal Justice majors became more common.  Twenty-five years later, the person entering law enforcement in New Jersey was college educated who's goal it was to become a professional police officer.  Good pay and good benefits brought good candidates, who became good police officers.  Now, both the pay and benefits are good.

Unfortunately, the COST of these benefits have skyrocketed.  The insurance companies have substantially increased the cost the governments pay in order to keep the benefits as required by contracts.  Why is the government not targeting the insurance companies and asking why they have tripled the cost for the same benefits?  Good question.  I'd love to know that answer.  I can surmise that one reason is that the insurance lobby is strong.  Very strong.  Much stronger than any police and fire or teachers union in New Jersey.  They are national companies with deep pockets in Washington.  Who is an easier target?   The police, fire and teachers.  Now Governor Christie has made us look like the bad guys.  We are the reason for all this mess. "Look at those greedy public servants" he can say, and the public listens.  Governor Christie isn't stupid.  He's been voted into office twice and knows a thing or two about word play.

Word play.  Governor Christie loves this.  A perfect example was recently brought to light that makes this perfectly clear.   A perfect example of the governors double speak is when he was pushing for a tax cut in 2012.  The Governor said the state could afford the tax cut because of positive economic growth.  Dr. David Rosen, the Chief Budget officer for the States office of legislative service disagreed.  The Governor responded by lambasting Dr. Rosen and calling him "the Dr. Kevorkian of the numbers".  The Governor said the numbers were good enough for a tax cut, and said "Why would anybody with a functioning brain believe this guy?" about Dr. Rosen, who by the way has a reputation for being right more than being wrong.  Later, when questioned by our states terrible financial crisis, Christie blames Dr. Rosen, saying that he "just got it wrong".

Recap: Christie ignores his Chief Budget Officer in 2012, calling him "the Dr. Kevorkian of the numbers" and "why would anybody with a functioning brain believe this guy".  When questioned by a reporter about our states terrible financial crisis, he blames this same person that he ignored two years earlier.

Another example of his word play and talking out of both sides of his mouth.  While facing an unexpected $2.75 billion budget gap over the next 13 months, which Christie is trying to close by delaying payments to the state’s pension fund, many on his staff have received raises of 23%!  Yes, you read that right, twenty-three percent (http://nj1015.com/some-christie-staff-members-get-large-pay-raises/).

According to NorthJersey.com, the raises come as Christie is withholding more than $2.4 billion in payments to the state pension fund because of revenue shortfalls. And Christie has delayed a property-tax relief program that averages about $500 for seniors and some families.  And the raises to the governor’s staff appear to have happened around the same time Christie vetoed the minutes of the commission that oversees the Pinelands after its members voted to increase the budget for its staff by 5 percent. Christie castigated the commissioners and said the decision was a “conscious disregard of the fiscal realities".

I'm sorry, I think I went a bit off topic there, but every time I think about how the Governor screwed the people who protect and educate the public, while being a two-faced politician, I get angrier and angrier.  Bottom line?  As time goes by, the Governor is going to continue to lie and continue to blame the unions for problems created and perpetuated by our elected officials. 

Comments?  Thoughts?  Ideas?

Pension-Gate: The lies behind Governor Christie

The New Jersey Police & Fire pension problems are making the headlines again, this time with Governor Christie using the pension fund payment he promised to make being used instead to cover an $807 million state budget shortfall.  Of course this is nothing new to current and retired members in the Police & Fire pension system.  This is just one more time that the Governor has made these members seem like the reason the state is in such a financial mess.   Once again, Governor Christie has deflected blame from the real reason for the pension mess. 

For the non-government workers reading this, imaging if you would that you had a 401k program where you worked.  You made payments into this retirement fund, and your employer made matching payments.  This money is for your retirement, and you spent your career relying on it to support yourself and family once you retire.  Years go by, and your 401k plan is looking good; really good.  Now imagine if you would that your employer decided that they wanted to pay for a totally unrelated program or project, and decided, without telling you, that they used your 401k to pay for it.  When you do take note of the “withdrawal”, you are told “don’t worry, we will put it back”, but they never do.  In fact, not only to they not put it back, but they stop making the matching payments.  And to top it off, they blame YOU, and tell you that you need to put in more money.  Sounds idiotic, doesn’t it?  This is what your government has been doing for years. 

Remember the Enron scandal?  When discrepancies were first discovered, the CEO Jeffrey Skilling verbally attacked the Wall Street analyst who questioned “unusual accounting practices” in an attempt to distract from the fact that Skilling knew exactly what was going on.  Governor Christie, our CEO, is verbally attacking the Police & Fire pension union and members in an attempt to distract the public from the fact that he and his predecessors are to blame.  This should be called “Pension-gate” to go along with bridge-gate.

I was a police officer for 25 years, and always made my pension payments; first paying 8.5% of my yearly salary into the pension system, and then later, when the governor changed the amount, I paid 10% into the pension system.  All the while, the state and municipalities were supposed to be making the same payments.  We all know these matching payments were not paid as required by law.

To see where this pension fund disaster began, we need a short history lesson.  Governor Christie did not start this mess, but he continues to perpetuate the revolving door of politicians who systematiclally raid our pension fund to pay for other shortfalls.  I place the blame squarely on the shoulders of Governor Whitman for starting this fiasco.  When she was elected to lead our state, the pension fund was well funded with over 100 billion dollars.  Yes, billion; with a B.  This was our money, and not funds allocated for any other resource.  Governor Whitman began taking money from this pension fund without so much as asking.  She simply took it to pay for various items, including balancing the state budget.  The pension fund was so well funded that she permitted the state and municipalities to stop making their required matching pension payments, but she did not permit the members; the men and women it was meant to help, to stop making their payments.  Billions of dollars were not paid into the pension system by the governments, but like good little soldiers, we kept making our 8.5% payments without missing a beat.  The government payments which were “deferred” were supposed to be made up later.  Smart towns realized this and put money away in something like an escrow account, to be used to make the payments later.  Most towns did nothing except to use that money for other purposes, leaving themselves open for future problems when they had to repay the money.  Who do you think the government blamed when they were eventually told to make their payments?  They blamed the pension fund and the members of the unions of course.

Governor Whitman was not the only one to raid the pension fund.  Each and every Governor has followed suit, including Governor Christie.  The pension raids were done routinely, causing the fund to dwindle.  Governor Corzine was the one who told the towns it was time to put back the deferred payments.  The towns that did not prepare for this day were in for sticker shock.  They now had to make up the missed payments to the tune of billions of dollars collectively.  Towns couldn’t afford to make the payments if they failed to sock the money away, so the only way to raise the money was to raise taxes. Who did they blame for this?  They blamed the pension system; the evil and despicable police and fire union members who diligently made their payments while the municipalities were given a temporary reprieve.

Governor Christie, you are a bold faced liar.  When you first ran for office, you made a promise to the Police & Fire union IN WRITING because you wanted our vote. The unions backed you after you published this letter:

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Let me quote Governor Christie.  “It is a sacred trust.  Nothing will change for the pension of current officers, future officers or retirees in a Christine Administration”.  Governor Christie put this in writing and published it for the world to see.  He did this to gain the support of a block of voters, and it worked.  We believed in him and supported him based upon a lie. He lied to us then and he is lying to you now.